As I am waiting for parts coming, I looked into my spare parts box and found Chinese locking tuners! However, when I tried them on my Yamaha EG112C2, I found out that they are not a perfect fit and needs a bigger tuner hole.

My questions are...

Is it worth the trouble for me to go ahead and enlarge the tuner holes or not?

What is the best inexpensive way for me to do this? I only have a drill and a dremel-like tool.

I replaced my stock Epiphone tuners with a set of Grover locking tuners. This necessitated enlarging the holes in the headstock. I would not attempt this with a power drill nor would I try to use a dremel.

I've drilled dozens of necks for tuner upgrades---even more for necks that I built from scratch---most of them with a hand drill. Take the neck off the guitar, and make sure it is held securely (in a vise or clamped to the workbench) drill in stages with slightly larger bits each time until you get to the size you need, and always drill from the front.

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The more you over complicate the plumbing, the easier it is to stop up the drain---Montgomery Scott

If you are going to enlarge the holes, DO NOT USE A DRILL!!!!! Find a taped reamer and VERY CAREFULLY enlarge the holes a tiny bit at a time until the tuners fit very snugly in the enlarged holes. You may need to work from the top first and then from the bottom, but work slowly and carefully.

I have two different tapered reamers. One is the long skinny one like you show in your picture and a shorter fat boy version. The skinny ones are perfect for violin pegholes and other small hole applications. The fat boy is a little easier to work with on larger holes. They usually cost about $7 or more so you did good on the cost. They will cut in both directions but you will find they like to be turned to the right and cut better in that direction. Always be careful when using the reamer because you can't put the wood back after you cut too much. I don't know what tuners you have but some of them don't have a screw tab to lock them in position so they don't rotate. They sometimes have a bump sticking out the underside. If yours has the bump, make sure you line it up exactly where you want it and tap on the underside of the tuner to make a little dimple on the head stock. Then you can drill a little hole for the bump to go into. If you don't get the tuning buttons all lined up straight, its going to aggravate you forever. When lining up the tuners, I turn the butterbeans flat with the plane of the head stock because its easier to judge the spacing when the butterbeans are close together.